The Chevron Services Australia group, operator of the Papua New Guinea Gas Project, has selected a combine of Australian Gas Light and Malaysian state oil firm Petronas to build, own, and operate the Australian section of the proposed Papua New Guinea-to-Queensland gas pipeline. AGL will be responsible for the onshore section and Petronas for the offshore portion.
The estimated cost of the 2,100-km Australian leg is $1.5 billion (Australian), and it forms a significant part of the overall project development cost of $8.2 billion.
Participants in the PNG Gas Project are BHP Petroleum Pty. Ltd., Chevron Asiatic Ltd., Mitsubishi Oil Co., Mobil Exploration & Producing, Oil Search, Orogen Minerals and Petroleum Resources Kutubu.
The Australian leg will commence offshore in Torres Strait near the tip of Cape York Peninsula, then pass down the peninsula to Townsville and Gladstone on the central east coast. AGL/ Petronas is also interested in options to push the gas further south into the Brisbane and even the New South Wales markets using existing pipeline infrastructure.
The line, which would initially originate from the Kutubu project fields in the Papua New Guinea highlands, is being designed to handle 600 MMcfd of gas.
The next step is to line up foundation customers to commit to long-term large gas contracts. In order for the project to be viable, the group would need to line up customers willing to accept at least a combined 260 MMcfd.
One group believed to be close to signing such a commitment is the new power station in Townsville, Australia, to be built at a cost of $500 million and with a 756-MW baseload. At full capacity this plant will require more than 100 MMcfd of gas. Construction of the plant is expected to begin early in 1999, with start-up slated for 2001.
Other potential large customers include Comalco's proposed $1 billion alumina refinery in Gladstone and a $700 million magnesium light metals plant in Gladstone, proposed by Normandy Mining, Ford, and Queensland Metals.
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